Consumers see no signs of economic recovery: what’s ahead for 2011
Eyes Wide Open 2.0
Insights Into The “In-Charge” Consumer
By Ogilvy & Mather and @Communispace
New research from Ogilvy & Mather and Communispace reveals extreme new consumer shopping behavior and spending priorities. This report looks at what this means for the 2010 holiday season and at how consumers will go to market in 2011.Consumers spend on crazy deals, shiny objects, tech productsWhat 2010 Tells us about the 2011 “In-Charge” Consumer
The 2010 consumer wallet is not opening up for big purchases this holiday season, according to a new study by Ogilvy & Mather in partnership with the consumer insight firm Communispace. The study documents the holiday shopping game plan of today’s much smarter, budgetminded shoppers – 78% of whom say that the recession is not over and 51% of whom say that economic recovery will take another two to three years.
Over a third of consumers polled say new technology products are on the top of their must-have lists; but when making purchases they have a price limit, bargain-hunting mentality, and they are using more coupons. One consumer said they would buy a Kindle if the price drops to $119. Another said they would buy a combo Blu-ray/ Netflix player only if the price was “under $125.”
“Consumers’ lust for new shiny tech gadgets is high, as these products offer a relatively affordable escape from the reality of a difficult economic climate,” explained Graceann Bennett, Director of Strategic Planning at Ogilvy. “But paying full price is not realistic. They want deals that satisfy desires on the things they want.” As one of the Communispace community members in the study said:“I really analyze my purchases ... no more full-priced new video games for me. I have started doing more research to make smarter purchases.”Marketing strategies that work—it’s all about the deal
The findings reveal how aggressive new marketing tactics must be used to drive both consumer wants and needs. To activate consumer desire, deals with time limits are driving consumer purchases, say Ogilvy and Communispace. They cite recent creative sales promotions by specialty retailers as evidence of the ticking clock buy now game retailers are using to get shoppers in stores.
“Breaking through the holiday clutter with eye-popping deals that practically scream We’re giving it away! is getting consumers into stores,” explained Manila Austin, Ph.D., Director of Research at Communispace. “The reality, however, is that consumers are exercising a newfound power and control. While there may be higher traffic numbers, we found that consumers are actually saying they will be spending less this year than last year–when spending was greatly reduced from previous highs.”The 2011 consumer—from powerless to powerful
Also on consumers’ shopping lists are food, clothes, and personal care and beauty products–items they are planning to buy BUT only by spending less. Bigger ticket items–cars, computers and home furnishings–are being put off for later, and at lower cost. Off the list: vacations with 21% of respondents saying they are eliminating vacations this year.
“Consumers today know they have the power,” explained Ms. Bennett. “At the early stages of the recession, they felt powerless and confused. Now the majority have budgets and a plan. They’ve gone from powerless to powerful. This is a huge transition.” The holiday holdouts research reveals a well-thought- out game plan for gift giving this year and buying in 2011.
“Big consumer spending trends we see continuing into 2011 are a much higher focus and practice on budgeting, more do-it-yourself activities and a rejection of the having-it-all lifestyle of the past,” explained Dr. Austin.
This idea is echoed by another consumer who said, “My goal is to get people things that are practical and that they will use. I’m tired of ‘stuff’ and am transferring that to other people.”What’s ahead for 2011
The holiday holdouts of 2010 will continue their thrifty ways for the foreseeable future, according to the research. Over a third of respondents said that economic recovery will take longer than expected–at least 10 years for full recovery.
The new study follows the “Eyes Wide Open, Wallets Half Shut” study that Ogilvy and Communispace partnered on one year ago. That initial research revealed significant changes in consumer lifestyle choices, in their pursuit of the American Dream and in their buying and shopping behaviors. Among the coping strategies consumers have adopted that will continue over the next year are:
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